Evanston, Nu Tussle Over Head Tax

Monthly Levy Would Affect University, 2 Hospitals

Evanston has long considered Northwestern University a freeloader, and an arrogant one at that.

Ever since city leaders challenged the private university's tax-exempt status 125 years ago and failed, officials have repeatedly made newer and more creative attempts to squeeze money out of the lakefront campus.

Now Evanston aldermen are tossing around another idea--a $10 a month employee head tax that would apply only to employers with 1,000 or more workers.

In other words, Northwestern.

Evanston Hospital and St. Francis Hospital, which, like Northwestern, are non-profit institutions exempt from property taxes, would be the only other employers affected.

The university, which considers the city ungrateful for the public service it performs in education, is crying foul.

"We obviously have very strong concerns," said Alan Cubbage, vice president of university relations at Northwestern. "It clearly is targeted at non-profits and, to an extent, Northwestern University."

The proposal would follow the concept of Chicago's controversial $4 a month head tax on workers at businesses with 50 or more employees. But in Chicago, non-profits are exempt.

The Evanston proposal reflects the long-standing tensions that prompted residents in March to approve a non-binding referendum measure to get the university to pay its "fair share" for municipal services. Last month, some aldermen threatened to withhold permission for the university's Homecoming Parade to travel down a public street.

Across the nation, other highly regarded private universities have waged battles with their hometowns. Some clashes have been resolved.

At Cornell University in Ithaca, N.Y., city and school officials signed a 13-year agreement calling for Cornell to contribute $1 million this year toward fire, school, municipal and other services. But Cornell's agreement is described as unusual.

More often, "schools over the past two decades have been scrupulous about taking their quasi-commercial properties and putting them on the tax rolls," said Sheldon Steinbach, with the American Council on Education, based in Washington, D.C. "It's an acknowledgment of good citizenship and that it's the right thing to do."

Northwestern officials note that the university is among institutions that have sold controversial properties, which may have reaped profit but served no educational purpose. At one time, Northwestern owned much of downtown Evanston and large chunks of property in Chicago. The university now owns 240 acres in Evanston, of which less than 2 acres are commercial, Cubbage said.

Northwestern also pays about $1.3 million annually to Evanston from taxes on athletic game tickets, electricity, gas, liquor and parking. The 11 percent athletic tax generates about $100,000 every time the Wildcats football team plays to a full stadium. The school pays another $2.2 million for water, building permits and other city services.

But Evanston officials say that's not enough and want the school to contribute more, particularly toward police and fire protection.

"Nobody likes imposing taxes, and nobody likes paying them," said Ald. Arthur Newman (1st). "If we don't go to this tax, there will be a substantial increase in the property tax that will hit residents and small businesses."

Northwestern and the hospitals are not alone in their opposition to the proposed employee head tax. Jonathan Perman, director of the Evanston Chamber of Commerce, said he is concerned the tax will be extended to all businesses.

"An employers head tax like this really would create a poor image for the business climate in Evanston," Perman said.

Ald. Stephen Engelman (7th) believes the tax could scare large employers away from Evanston. But even critics of the proposal acknowledge that the city is unlikely to find the space for another business that employs 1,000 or more.

The City Council's Budget Committee is expected to discuss the tax again on Dec. 5, before forwarding a recommendation to the full council. The council is legally mandated to produce a balanced budget for fiscal 2002 by Feb. 28.

The city's lawyers are currently reviewing the legalities of the proposed tax's 1,000 employee cutoff. Governmental entities, such as public school districts, would be exempt.

With the monthly tax, St. Francis Hospital, which employs 1,858 full- and part-time workers, would pay about $223,000 a year, while Evanston Hospital, with about 3,600 employees, would pay roughly $432,000, according to city figures. Northwestern, with about 5,000 workers, says the tax would cost the university some $600,000.

Cubbage added that the tax would translate into increased tuition for students.

"The only place we have a revenue source is student tuition--that and private gifts to the university," Cubbage said. "It's unlikely that our alumni are going to donate more so we can, in turn, give to the city."